Are States Entitled to Default on the Sovereign Debts Incurred by Governments in the Past?

Abstract

In this article I claim that states are in general morally responsible for repaying sovereign debts incurred by governments in the past. However, once we understand the reasons why they are morally responsible for repaying them, we should conclude that a portion of them are not binding. The steps of my argument are the following. In the first place, I reject the philosophical accounts that have been provided so far to explain why states should honour debts incurred by governments in the past. Second, I propose my own positive account, which relies on an analogy with private law. Third, I show that the strategy of relying on private law also leads to the conclusion that, under certain conditions, the general claim that debts ought to be honoured is not valid. When these conditions are satisfied, states are morally entitled to repudiate their debts.